Ministers ‘dragging feet’ over leasehold house ban, 2017 promise unfulfilled

Mustn’t upset the developer lobby by hasty action, must we? – Owl

Melissa York

The government has been accused of dragging its feet over a ban on “outrageous” new leasehold houses as its reforms to property ownership are set to be debated by MPs.

A long-awaited bill to effectively restrict ground rents to zero on new leasehold properties arrives in the Commons for its second reading today.

This would protect future homeowners from having to pay exorbitant ground rents that double every 10 to 15 years, a practice that the Competition and Markets Authority has clamped down on in the past two years.

Whitehall has promised to outlaw new leasehold houses since 2017 but the pledge does not appear in the new bill.

Lucy Powell, the shadow housing secretary, said: “There is no justification for a house to be sold as leasehold.

“It is an outrageous practice that allows developers to scam homeowners out of thousands of pounds a month.

“Half a million people have already been trapped in leasehold houses under the Tories’ watch, yet they have chosen not to use this bill to fix this obvious injustice.” Leasehold house owners have also complained of being charged extortionate estate management fees, which has led to the nickname “fleecehold” for these types of properties.

Of the 480,567 leasehold houses that have been sold in the last ten years, 287,434 of them were situated in the northwest of England.

Tracy Whittle, 60, bought a four-bedroom detached leasehold house in Northwich, Cheshire, in May 2016.

The housebuilder David Wilson Homes told her she could buy the freehold of the property for £5,500.

A few months after the sale Whittle tried to buy it, but her solicitor told her that the freehold had been sold to Aviva Investors and it now cost £11,000, and she would have to pay their legal fees.

Whittle pays £250 a year in ground rent and £150 in estate management fees. Her lease only allows her to have certain pets and forbids roof aerials.

The Department of Levelling Up Housing and Communities said: “We remain committed to banning the sale of new leasehold houses. We will set out further . . . reforms in due course.”